Tuesday, November 20, 2012

How to master mutual funds; focus on the iFUND mutual fund



As we planned to master mutual funds and unit trusts, let us find out what the iFUND is and how best we can benefit from it and understand how it is managed. In my previous post, we look at EPACK (What you should know about EPACK), now our focus is on iFUND from EDC, a member of the Ecobank group.
The iFUND is mutual fund from Ecobank Capital (formerly, Ecobank Development Corporation, EDC) and it is structured to invest in both fixed income securities (Treasury bills, bonds, etc) and equities (stocks). The portfolio structure of iFUND reveals that,
it is a balanced fund with the objective of preserving and enhancing shareholder wealth to meet medium and long term financial goals while creating liquidity to meet short term needs. This mutual fund unlike many has specific portfolio structure with asset classes as Fixed income (50% and a rebalancing range of +/-20) and Equity (50% and a re-balancing of +/-20). This simply means that, the fund manager has the discretion to invest or select specific investments between this particular structure. The fund manager, unless the structure changes, cannot re-balance the portfolio above or below 50% (+/-20). For instance, in 2010, the fund manger invested 63.36% in to Fixed income securities and 36.64% in to equity (Stocks). In reference with this structure, the fund manger cannot invest 80% in to fixed income and 20% in to stocks/equity or vice versa.
The iFUND posted an impressive 29.44% return in 2010 and it represented an improvement on the 2009 return of 21.40%. This fund invested in some best performing stocks in 2010 including Ghana Commercial Bank (GCB) which gained +264.86%, Fan Milk ltd (+164.86%), SIC Insurance (+59.26%) and Standard Chartered Bank which gained +50.53%. IFUND invests heavily in the Ghanaian financial market particularly in stocks on the stock market and government treasuries.
Investors who are medium to long term oriented can consider the iFUND as an investment opportunity. 


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